A.M. Best has affirmed the financial strength and creditor issuer ratings of Waco Fire and Casualty Insurance Company, but the captive insurer has asked to be dropped from the rating process.
Waco’s “B+ (Good)” and “bbb-“ ratings for financial strength and issuer credit respectively were affirmed, but after the Tennessee-domiciled captive’s management requested to be dropped from the process, the ratings were withdrawn.
According to A.M. Best, the ratings reflected Waco’s strong risk-adjusted capitalisation and its positive after-tax income posted annually since 2004.
But Waco’s positive rating factors were partially offset by the captive’s high expertise ratio, its volatile pre-tax operating return measures and narrow market scope.
A.M. Best believes the captive’s risk-adjusted capitalisation would have continued to support the current ratings. However, Waco’s premiums are written for affiliated companies, which according to A.M Best, limits the captive’s market scope.
Waco’s premium volume has also fallen over the past 10 years, as the parent has sold off a number of its operating entities. Premium volume further declined in 2013 following the non-renewal of its personal auto programme participation.
According to A.M. Best, writings are expected to continue to decline in 2015.
